DEAR BOB: Can a home seller use the buyer’s earnest money good faith deposit to make repairs to the home and not tell the buyer? Or is the deposit used only at the closing? I am concerned because we are purchasing a “for sale by owner” house and I noticed the lawyer already cashed our check. Is this “normal” for the seller to get our money before the sale closes? –Tonya G.

DEAR TONYA: No, it is not “normal” for the home seller to receive the buyer’s deposit money before the sale closes. For your protection as the buyer, you should make the deposit check payable to the firm that will be handling the closing of the sale.

Purchase Bob Bruss reports online.

Unless you made the deposit check payable to the seller, the seller should not be able to obtain those funds until the sale closes and the title transfers to you.

If the lawyer is holding the deposit funds in his trust account, that’s fine. However, if the seller has your money and, for some reason, the sale never closes, getting your deposit refunded could be a big problem, especially if the seller spent the deposit money.

Your situation shows another danger of buying direct from a home seller without the benefit of an experienced real estate agent to protect both parties.

SHOULD HOME SELLER REPLACE AN 18-YEAR-OLD ROOF?

DEAR BOB: I am selling my 40-year-old home, which is located on 10 acres. In this buyer’s market, should I replace the ugly 18-year-old roof? –Patti B.

DEAR PATTI: The answer depends on the type of roof and if it is leaking. Some types of roofs last 30 to 50 years. But most asphalt shingle roofs are due for replacement in 15 to 20 years.

If the roof looks bad, although it is not yet leaking, I would replace it with an attractive asphalt shingle roof at a modest cost. A new roof will be an important sales benefit to make your home listing stand out among all the other listings.

RECASTING A MORTGAGE MAY BE CHEAPER THAN REFINANCING

DEAR BOB: A friend was telling me about recasting a mortgage loan. Have you heard of this and what is your opinion of recasting verses refinancing a mortgage? –Linda W.

DEAR LINDA: Recasting a mortgage means the borrower and lender agree to change the terms of the mortgage, such as the interest rate, monthly payment or due date for a balloon payment.

In other words, recasting a mortgage is a modification of the loan terms. All that gets recorded is a modification agreement, rather than a new mortgage or deed of trust.

For example, several months ago I entered into a home equity credit line modification with my existing home equity lender. We agreed to reduce my interest rate and increase my credit line. This was cheaper and easier than doing all the paperwork and recording a new home equity credit line.

The new Robert Bruss special report, “Pros and Cons of Living Trusts to Avoid Conservator ship, Probate Costs and Delays for Your Heirs,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, Calif., 94010, or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this column are welcome at either address.

(For more information on Bob Bruss publications, visit his
Real Estate Center
).

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